For those of a nervous nature – look away now…
For Project Managers only: I took great interest in the launch of Earned Value Management qualification by the APM Group in June this year. At last, a step toward ‘growing up’ and thinking about using EV as a control tool rather than just a reporting tool (” I’m only using it because management/customer insists”).
If projects were your personal investment fund, wouldn’t you want to know the answer to the question “what did we get for the money we spent?”
Of course you would. If you hired a handyman to fix something in your home, and their response to your question “why is this so expensive” was, “well mate, it took me over 4 hours”, you might feel sympathy, but you really want to know if they completed the job so you get value for money!
So you know that for a particular duration within your project that you planned to spend, say, £5000, and let’s suppose you had actually spent £5,500, you’re not sure whether you’re ahead of schedule (we spend more because we did more work), or that you’re overspending (it cost us more than we thought to do the work).
The third variable is Earned Value of course, which is the planned cost of an activity multiplied by the percentage complete. So a £1000 activity that is 50% complete means you’ve ‘earned’ £500.
The easiest way to determine your progress is to base all your interpretation from the standpoint of the Earned Value amount. If the planned cost amount is more than your EV amount – then you’re behind schedule (and vice-versa).
If your Actual cost is more than your EV, then you’re overspending (and vice versa).
Okay, so this is not a tutorial on EV – but I hope I’ve whetted your appetite to make better friends with this invaluable project management control tool.
So how about I share my video with you: